Digi-TV review under radar

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Last Monday, the Minister for Communications, Daryl Williams, announced a series of reviews of broadcasting policy which have the potential to transform the media landscape. Apart from the prospect of a fourth commercial television network, however, there has been minimal discussion of their implications.

That may have something to do with the timing. Budget-eve announcements tend to be overwhelmed by the fixation with the nation's finances. Given the controversy which usually surrounds anything to do with media policy, perhaps the timing was deliberate.

It is also possible the lack of interest in the reviews relates to the many unsuccessful attempts to reform media policy in the past, and cynicism that the latest reviews will produce a different outcome, particularly given they have been commissioned by a minister who will retire before they are completed.

This time, however, does promise to be different because the digital TV regime, under which the Government maintained the free-to-air networks' oligopoly and stopped the real development of digital TV in its tracks, had some key decision points embedded in it which have to be revisited within the next year.

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One is the possibility of a fourth commercial network. The moratorium on new licences expires at the end of 2006.

Another is the switching off of the analog signal, which will free up massive amounts of spectrum, as early as 2007. That decision, and a review of the spectrum-hungry high-definition digital TV requirements, will open up the potential not just for a new network but for multi-channelling by the existing networks, and perhaps a datacasting regime that actually attracts some operators.

The fact that there are time-lines running, with deadlines for decisions that could liberalise the broadcasting environment, makes it probable that there will be some changes to the settings within which the industry operates.

How radical and deregulatory those changes might be may depend on the outcome of the election: Labor's Lindsay Tanner appears to have a far more holistic view of media industry policy than his Liberal counterparts.

If there were to be significant changes to the existing ground rules for broadcasters, however, it would be difficult to contain reforms to the sector. There would inevitably be a need to revive discussion about foreign investment in the media generally, as well as the cross-media restrictions.

Thus Williams's reviews have the potential to do what his predecessor, Richard Alston, refused to do, and put on the table all the eccentric media-specific rules and regulations which constrain the industry's dynamism.

Even without the reviews there would be pressure for some changes because the strong early response to Foxtel's digital rollout is undermining the free-to-air opposition to deregulation.

Foxtel has attracted almost as many subscribers to its digital service in its first few months of operations as the networks have attracted to their digital offerings in almost four years.

Foxtel will drive digital TV, control the entry of the digital signal to the home through its set-tops and further fragment the networks' audiences and advertising bases unless they have more flexibility to respond. The networks (other than Seven) were opposed to multi-channelling and lobbied successfully to make the rules for datacasting so restrictive that they precluded any commercial offering at all.

Williams's reviews hold the prospect of the networks being able to offer subscription or pay-per-view services alongside their free-to-air channels - an opportunity for them to develop their own pay TV businesses. That might become even more compelling if they faced a new free-to-air competitor as well.

The blueprint for media reform was provided by the Productivity Commission in 2000. The commission recognised that the key to broadcasting reform was spectrum availability, and came up with an elegant, market-driven, use-it-or-sell-it set of incentives, based on a less wasteful standard definition signal, which would have accelerated the penetration of digital TV and freed up spectrum early to liberalise entry to the sector.

The Government opted instead for the high-definition standard and parallel analog-digital broadcasting until 2007, effectively protecting the networks from any competition (other than from Foxtel) for the larger part of a decade.

That decision can't be undone, but the basic vision of freeing up the digital broadcasting environment, creating opportunities for new players to enter the sector and leaving the decisions on what they offered mainly to them remains appealing.

The market would sort out the winners and losers, and determine how the spectrum was used, instead of the Government awarding oligopoly rents and dictating technologies and content.

If broadcasting can be deregulated, it would make sense to pursue parallel liberalisation of the media ownership rules. The Productivity Commission favoured staged deregulation of the ownership rules, with the restrictions on foreign ownership lifted first to widen the pool of industry participants (and avoid further concentration of the existing oligopolies) and subsequently the removal of the cross-media rules.

There is convergence occurring between technologies and content on platforms that are increasingly digital. Maintaining artificial barriers to dynamism and market-driven creativity creates distortions and confers advantage on the basis of incumbency rather than merit.

The Williams reviews, regardless of which party gets to decide on them, will produce the opportunity to finally put in place an industry landscape driven by national and consumer interests rather than by those of existing media moguls and the politicians out to appease them.